Investing in the Cognitive Future: Scale Closes New $600M Fund
Today we are announcing the creation of our seventh fund, Scale Venture Partners Fund VII. The $600M fund is the next chapter in our commitment to identifying future market leaders across the broader enterprise technology landscape.
First and foremost, we want to thank our LPs, both those who we’ve come to know through our previous funds and those joining us for the first time in this new venture. We take our commitment to you and your fiduciary responsibilities very seriously.
Since we announced the formation of our previous fund, Fund VI, in mid-2018, Scale has seen developments inside the portfolio and inside the firm. Fresh off of recent IPOs from Root Insurance, JFrog, and Bill.com, we’d like to share an update on some of the less visible developments taking place behind the scenes.
Past Is Prologue
With Fund VII, we are looking to build on the processes and perspectives that have driven our success to date. At a high level, our core focus areas remain unchanged:
We continue to seek opportunities in “future of work” technologies, a long-time focus area for us and one where the acceleration of digitization has been further catalyzed by COVID. This category includes our investments in Bill.com, Box, Wrike, ScoutRFP, HubSpot, and DocuSign, as well as WalkMe, Lever, and Papaya Global.
Similarly, we continue to track technical developments in Cloud infrastructure. The Cloud may have won, but its enabling technologies are always evolving. Our investments in this category include JFrog, CloudHealth, and TreasureData, as well as CircleCI and Honeycomb.
We see endless opportunities within industry verticals that have not traditionally invested heavily in software solutions. Investments like Root Insurance, KeepTruckin, Airspace, Proxy, and Drone Deploy fit this category.
Enterprise security is an open-ended opportunity for strong market growth and the formation of great new companies. We continue to like emerging categories in cybersecurity that are reflected by our investments in Forter, Agari, Socure, and PerimeterX.
As AI/ML capabilities have expanded, so too have our expectations for these technologies to underpin massive new markets. Investments like BigID, Solvvy, and Observe.ai fit this category. We are also looking past the current state of AI/ML towards its next generation, where core AI, ubiquitous platform interoperability, and automated data capture will enable a new class of enterprise software we call “Cognitive Apps”. More on that below.
Growing the Team and Promoting from Within
Our roster of partners remains the same. Rory, Stacey, Andy, Ariel, and Alex will continue to lead the investing team in Fund VII.
That team, however, has grown in size and seniority. Since 2018, we have promoted Jeremy Kaufmann to Principal, Sam Baker to Vice President, and John Gianakopoulos to Senior Associate.
In addition, Chris Yin recently became our newest Principal. Chris joined Scale from a VP Product role at RainforestQA where he led the product, design, support, and community teams. Noah Gross and Rahim Noorani, Associates, round out the list of recent hires.
On the operations side of the business, we’ve added substantially to our marketing and portfolio support capabilities with the hire of Archer Smith, Head of Marketing, and Brian Walker, Director of Content. Both work with Operating Partner Dale Chang, who leads our Scale Studio initiative.
Stephan Eberle will continue in his role as head of LP relations and General Counsel.
Cognitive Applications: Changing the Way Software Is Built and Used
Much of our work as investors is forming qualified opinions on developments in specific markets. Less visible from the outside is our work on megatrends, the trends-of-trends that dictate the dynamics of multiple markets across extended periods of time. SaaS is a megatrend, as is the replacement of on-prem software with Cloud software.
We believe that the conjunction of machine intelligence and ubiquitous platform interoperability will drive a megatrend we’ve come to call “Cognitive Applications”.
Our premise is that enterprise software is undergoing a fundamental transformation that is not yet widely recognized -- but is already well under way. Over the next decade, this transformation will create a new class of business software that sits on top of today’s SaaS and Cloud platforms to fully automate simple tasks and augment users performing complex tasks.
Far more powerful and consequential than “bolt-on AI”, Cognitive Applications are built ground-up around Machine Learning and other AI technologies, a shift so fundamental that 10 years from now the way we build software and the way we use software will be completely different.
Andy Vitus explains more about this revolution in intelligent software and software development.
Scale Studio: Unrivaled Dataset Powers Go-To SaaS Benchmark Platform
Scale Studio continues to evolve as the go-to tool for SaaS performance benchmarking. It is open to anyone who wants to understand their company’s growth, efficiency, retention, and burn rate in the context of comparable businesses.
Since its launch in 2018, the dataset that powers Studio benchmarks has grown significantly. Today the application contains financials and metrics on 800+ private companies across more than 8,000 quarters. That massive dataset gives Studio benchmarks a high degree of precision -- and thus value -- to founders and company leaders using it to support their decision making. To give an example: a $20M run-rate software startup will receive benchmarks based on 20 or more comparable businesses at that exact revenue level.
Inside the firm, the portfolio-facing Studio application is used daily by our team and the finance and leadership teams at our portfolio companies. We recently rolled out the ability for our portfolio companies to generate Board-ready presentations that compare past performance and forward projections to the benchmark set.
We Look Forward to Meeting You
We’ll conclude with an open invitation to founders of enterprise software companies. Scale is always interested in meeting talented teams able to spin a great idea into an even greater company. Reach out to us and let us know what you’re building.
We look forward to meeting you as we build out our seventh fund.
Scale Venture Partners
Originally published December 3, 2020.